EBS Building Society v Hefferon and Another

• Jurisdiction: Ireland
• Judge: Mr. Justice Brian J. McGovern
• Judgment Date: 02 October 2012
• Neutral Citation: [2012] IEHC 399
• Court: High Court
• Date: 02 October 2012

[2012] IEHC 399

THE HIGH COURT

[No. 1521 S/2011]

[No. 72 COM/2011]

EBS Building Society v Hefferon & Kearns

COMMERCIAL

BETWEEN

EBS BUILDING SOCIETY

PLAINTIFF

AND

THOMAS (OTHERWISE TOM) HEFFERON AND MICHAEL KEARNS

DEFENDANTS

TAXES CONSOLIDATION ACT 1997 S774

TAXES CONSOLIDATION ACT 1997 PART 3 CH1

TATE ACCESS FLOOR INC v BOSWELL 1991 2 WLR 304

MCK (F) v C (D) UNREP CLARKE 26.5.2006 2006/36/7617 2006 IEHC 185

BRINK'S MAT LTD v ELCOMBE 1988 1 WLR 1350

BRENNAN v LOCKYER 1932 IR 100

ATKIN v MORAN 1871 IR 6 EQ 79

BAMBRICK v COBLEY 2006 ILRM 81

KANWELL DEVELOPMENT LTD v SALTHILL PROPERTIES (IN RECEIVERSHIP) UNREP CLARKE 11.1.2008 2008/31/6885 2008 IEHC 3

BRINKS-MATT LTD v ELCOMB 1988 3 AER 188

TAXES CONSOLIDATION ACT 1997 S772

LAFFERTY & JARVIS COMMERCIAL ENFORCEMENT 2ED 2008 PARA 6.30

GLANVILLE ENFORCEMENT OF JUDGMENTS 1999 PARA 16-12

HONNIBALL v CUNNINGHAM 2010 2 IR 1

NATIONAL IRISH BANK LTD v GRAHAM 1994 1 IR 215

PICARDA THE LAW RELATING TO RECEIVERS MANAGERS & ADMINISTRATORS 4ED 2006 TOTTEL PUBLISHING P403

LUCAS v HARRIS 1887 18 QBD 127

GARAHAN v GARAHAN 1959 IR 168

TAXES CONSOLIDATION ACT 1997 S772(3)(F)

TAXES CONSOLIDATION ACT 1997 S774(1)

FIELD v FIELD 2003 1 FAM 376

BLIGHT & ORS v BREWSTER 2012 1 WLR 2841

FONU v MERRILL LYNCH BANK & TRUST CO (CAYMAN) LTD & ORS 2012 1 WLR 1721

MASRI v CONSOLIDATED CONTRACTORS INTERNATIONAL (UK) LTD (NO.2) 2009 2 WLR 621

CROWE ENGINEERING LTD v LYNCH 1992 2 FAM LJ 45

Pensions - Pension funds - Appointment of receiver - Equitable execution - Application to set aside the appointment of the receiver - Material non-disclosure - Funds not amenable to attachment

Facts: The defendants made an application seeking an order discharging an order made by the High Court on the ex parte application of the plaintiff, in which a receiver was appointed by way of equitable execution over two pension funds.

The application was based on two grounds. Firstly, there was a material non-disclosure on the part of the plaintiff in the ex parte application for the appointment of a receiver by way of equitable execution. Secondly, that neither the capital funds held in the Pension scheme nor any payments deriving from them in the future to the defendants, are amenable to the attachment by way of appointment of a receiver by way of equitable execution.

The court considered the first ground and held that the assertions made by the plaintiff were calculated to influence the court when making the order sought. The order could therefore be discharged on this ground alone.

Held by McGovern J, that the pension funds of the defendants were not amenable to attachment by way of appointment of a receiver by way of equitable execution. Neither of the defendants had a legal or beneficial ownership in respect of the assets until they reached a certain age and even then this would be subject to the agreement of the trustees and statutory requirements. Masri v Consolidated Contractors International (No 2) [2008] All ER (Comm) 305 and Tassarruf Mevduati Sigorta Fonu v Merrill Lynch Bank and Trust Company (Cayman) Ltd [2011] UKPC 17 distinguished.

1 JUDGMENT of Mr. Justice Brian J. McGovern delivered on the 2nd day of October 2012

2 1. In this application, the defendants seek an order discharging the order of the High Court made on 13 ^th March, 2012, on foot of the ex parte application of the plaintiff, in which Mr. Tom Kavanagh of Kavanagh Fennell Chartered Accountants was appointed as receiver by way of equitable execution over:-

3 (a) The Tom Hefferon Pension Fund described in the Deed dated 3 ^rd January, 2007, made between NDMG Limited of the one part, the first named defendant and Jean Hefferon as company trustees and Alan Flynn of BDO Simpson Xavier Financial Services Limited of the other part.

4 (b) The Michael Kearns Pension Fund described in the Deed dated 4 ^th July, 2006, made between NDMG Properties Limited of the one part, the second named defendant and Margaret Kearns as company trustees and Alan Flynn of BDO Simpson Xavier Financial Services Limited of the other part.

5 2. Both funds have been approved by the Revenue Commissioners as exempt approved pension schemes under s. 774 of the Taxes Consolidation Act 1997. The defendants seek to set aside the appointment of the receiver on two grounds, namely:-

6 (i) material non-disclosure on the part of the plaintiff in the ex parte application to the High Court on 13 ^th March, 2012, for the appointment of a receiver by way of equitable execution; and

7 (ii) that neither the capital funds held in the Pension Scheme nor any payments made therefrom in the future to the defendants are amenable to attachment by way of appointment of a receiver by way of equitable execution over the said Pension Schemes.

8 3. The following is a chronology of events which are relevant to the application:-

9 · On 4 ^th July, 2006, by Deed made between NDMG Properties Limited of the one part and Michael Kearns and Margaret Kearns and Alan Flynn of the other part, the Michael Kearns Pension Fund was established.

10 · By letter of 11 ^th July, 2006, the Revenue Commissioners approved the Michael Kearns Pension Fund as a Retirement Benefits Scheme for the purposes of Part 30, Chapter 1, of the Taxes Consolidation Act 1997.

11 · On 3 ^rd January, 2007, by Deed made between NDMG Properties Limited of the one part and Tom Hefferon, Jean Hefferon and Alan Flynn of the other part, the Tom Hefferon Pension Fund was established.

12 · By letter of 13 ^th February, 2007, the Revenue Commissioners approved the Tom Hefferon Pension Fund as a Retirement Benefits Scheme for the purposes of Part 30, Chapter 1 of the Taxes Consolidation Act 1997.

13 · On 9 ^th May, 2011, by consent, the High Court gave judgment against the defendants in favour of the plaintiff in the sum of €7,231,891.59 together with costs in the sum of €167.

14 · Following the making of the order on 9 ^th May, 2011, the plaintiff registered judgment mortgages over some nine properties belonging to the defendants including each of the defendant's family homes.

15 · On 17 ^th May, 2011, the plaintiff obtained a European Enforcement Order against the defendants on foot of the aforesaid judgment.

16 · By letter dated 8 ^th July, 2011, in response to a letter of 15 ^th June, 2011, from the solicitors for the plaintiff, the solicitors for the defendants advised that the defendants were both members of an Occupational Pension Scheme sponsored by their employer. No further inquiries were raised by the solicitors for the plaintiff in relation to the said Pension Schemes.

17 · On 27 ^th July, 2011, the plaintiff obtained an order of attachment of shares against the defendants on an ex parte basis.

18 · On 21 ^st September, 2011, the plaintiff appointed Mr. Ken Fennell of Kavanagh Fennell Chartered Accountants as receiver of property at 12 Camden Row, Dublin 8 owned by the defendants.

19 · On 20 ^th December, 2011, the plaintiff obtained an order for discovery in aid of execution against the defendants.

20 · By supplemental deeds dated 15 ^th February, 2012, and as permitted and provided for by Clause 15 of the defendants' Trust Deeds, the "Normal Retirement Age" as defined in Schedule 1 of each deed was amended to the 70 ^th birthday of a member.

21 · The supplemental deeds, duly executed by the Principal Employer, the defendants and their respective wives and Mr. Alan Flynn, Pensioner Trustee, were executed on foot of agreement reached on 31 ^st January, 2012 and 15 ^th February, 2012.

22 · On 17 ^th February, 2012, the defendants swore affidavits of discovery in aid of execution on foot of the order of 20 ^th December, 2011.

23 · On 6 ^th March, 2012, the plaintiff issued Circuit Court proceedings against the defendants and their spouses seeking, inter alia, a well-charging order, and an order for sale in respect of their family homes.

24 · On 13 ^th March, 2012, on ex parte basis, the High Court made an order appointing Tom Kavanagh of Kavanagh Fennell Chartered Accountants as receiver by way of equitable execution over the Tom Hefferon Pension Fund and the Michael Kearns Pension Fund and gave liberty to the defendants to apply to vary or discharge the said order.

25 4. In addition to the defendant's application to set aside the appointment of the receiver, separate motions have been brought by the defendants' spouses.

Allegation of Material Non-Disclosure by the Plaintiff in ex parte Application.

26 5. The ex parte application for the appointment of a receiver by way of equitable execution was made on foot of an affidavit sworn by Mr. Philip Butler on 9 ^th March, 2012. In para. 9 of his affidavit he states that in relation to the defendants' pension funds "… there had been serious non disclosure on the part of each of the defendants in the original statement of affairs". In para. 13 of his affidavit he states:-

"The said pension funds, which were both assets of very substantial value, were not referred to at any point in the estimated statements of affairs provided to the plaintiff under oath in June 2011. … The existence of the defendants pensions was excluded from statements of affairs prepared in June 2011, notwithstanding the fact that the plaintiff's solicitors (by letter dated the 20 ^th May, 2011, to Ever sheds, the defendants' solicitors) called upon each of the defendants to provide inter alia:-"

27 '… a detailed Schedule of all assets held by him wherever such assets may be situate in the world (including but not limited to all real and personal property) in which he has any legal or beneficial interest (whether held in his own name, in partnership with others or in a joint venture with others through companies or through any form of trust) over which he has any form of control or to which he...